§ Lord BESWICKMy Lords, if it is convenient to the House I will repeat a Statement made by my right honourable friend in another place reporting on the decisions reached last week by the Council of Ministers (Agriculture), and the Government's own determination of guaranteed prices following the Annual Review.
" In my view the most important decision of the Council was to make radical changes in the Community regime for beef. Under the new arrangements it will be open to any member country to switch the emphasis of support away from permanent intervention and on to a variable premium, financed to a substantial extent from Community funds. The United Kingdom will take up this option. During the beef year beginning in March, the Community will pay about £47 million towards the cost of the premiums we shall pay on clean cattle sold for slaughter.
" The average premium throughout the year can be up to about £5 per live cwt. but may vary above or below this figure at particular times. The total cost of the premiums will vary according to the state of the market, but at 36 most would be about £135 million over the year. These premiums will enable the Government to assure producers of a fair return. I shall announce details of the scheme later; but my aim will be to provide an average return to producers of between £22 and £23 per live cwt.
" It is an essential feature of the new arrangements that the premium cannot be paid on beef sold into intervention.
" This reduces the effective buying-in price to a level which will mean that support buying cannot take place on more than a limited scale.
" This new system has been introduced on our initiative. I regard it as a major reform of the Common Agricultural Policy. It gives the producer an assured return without forcing consumer prices up to unacceptable levels, and without building up mountains of frozen beef. This is the right way to give support.
" The other main group of decisions concerned the level of common agricultural prices for the coming year. The increases average between 9 and 10 per cent. They relate, however, to support prices for Community producers. Their effect on food prices in this country, together with that of the transitional step we make towards common price levels, should be less than 2 per cent.
" The biggest common price increase is of 15 per cent. for sugar. As a result of monetary changes, our own sugar beet growers will benefit from an effective increase of about 17 per cent. bringing the total sugar beet price to about £16 a ton. I hope this will encourage an increase in the sugar beet acreage.
" The common target price of milk is increased by 6 per cent. in March and 4.7 per cent. in September. These increases, together with the transitional step, will result in higher prices for butter and cheese; but the Council also made provision to raise the contribution from Community funds to the general butter subsidy from about £25 to about £48 a ton.
" The Council also agreed on minor changes in the monetary arrangement 37 applying to the Common Agricultural Policy. The percentage increases in common farm prices, when expressed in national currencies, will be slightly smaller in countries with appreciating currencies and larger in countries whose currencies have depreciated. For the United Kingdom this change means a new representative rate reducing monetary compensatory amounts by 2½ points, over and above a reduction of 1¼ points which is being applied on a general basis to countries with depreciated currencies.
" Finally, the Council reached agreement in principle on the Directive on Less Favoured Areas, which deals mainly with aid for hill farming. We obtained an amendment so that the payments are not reduced for pensioners, a point to which this House attached importance. The contribution from Community funds will be a minimum of 25 per cent., but this is to be considered next month with a view to an increase. I expect the United Kingdom to be a net beneficiary.
" I turn now to the determinations of guaranteed prices which the Government has made in the light of the Annual Review.
" First, the guaranteed price of milk will be increased by some 5p per gallon, and is expected to average about 34.75p per gallon for the year from 1st April. The standard quantity will be increased by 59 million gallons so that it should continue to include all milk sold by the Marketing Boards. As a consequence, the maximum retail price of milk will be increased by 1p per pint on 2nd March.
38 " The guaranteed prices for wheat, barley and oats will be increased to £51.80, £46.80 and £44.60 respectively.
" The guaranteed price for potatoes will be raised by £6 to £28 per ton.
" The guaranteed price for fat sheep will be increased by 6p to 35.5p per lb. The guaranteed price for wool will be increased by 5p to 3lp per Ib.
" The hill sheep subsidy will be raised by a further 60p per ewe over and above the increase made in December. The Exchequer cost of the increase in the level of support for the sheep sector in 1975–76 is estimated at about £34 million, including £9 million for continuing last December's hill sheep subsidy increases.
" With the introduction of the new arrangements for beef, I propose to lay an Order restoring the calf subsidy to the level obtaining before the increase of £10 made last March.
" Finally, it is intended that the guaranteed price for pigs should be set at £403 for the period till July, when the basic price applying in this country under Community arrangements will be increased to substantially above that level.
" With permission I shall circulate in the Official Report the full details of these determinations, and a note of the main economic data arising from the Annual Review. I am confident that the new beef régime, the increases in Community prices applying in this country, and the increases in our own guaranteed prices together represent a settlement that is good for our farmers and also takes due care of the interests of the British consumer."
My Lords, that ends the Statement.
§ Following are the details referred to:
| 1974–75 | 1975–76 | ||||
| Determination at 1974 review | Revised determination | Determination at 1975 review | Increase over 1974 review determination | Increase over revised 1974–75 determination | |
| Wheat (per ton) | £39.62 | £42.97✶ | £51.80 | £12.18 | £8.83 |
| Barley (per ton) | £35.73 | £38.78✶ | £46.80 | £11.07 | £8.02 |
| Oats (per ton) | £34.20 | £37.12✶ | £44.60 | £10.40 | £7.48 |
| Potatoes (per ton) | £22.00 | No change | £28.00 | £6.00 | — |
| Pigs (per score dwt.) | £3.49 | £4.03† | —‡ | — | — |
| Sheep (per lb. dew.) | 29.50p | No change | 35.50p | 6.00p | — |
| Wool (per lb.) | 26.00p | No change | 31.00p | 5.00p | — |
| Milk (per gallon) | 26.27p | 29.74p§ | 34.75p|| | 8.48p | 5.01p |
| ✶ It was announced on 17th July 1974 that the 1974–;75 guaranteed prices for wheat, barley and oats were raised to £41.27, £37.26 and £35.67 respectively in the light of increases in CAP prices agreed in March. These guaranteed prices have been further raised in the light of the decisions of the EEC Council of Ministers in September-October 1974. | |||||
| † The revised determination is effective from 28th October 1974. | |||||
| ‡ The pigs guarantee is to be terminated after 27th July 1975 in accordance with the Act of Accession. | |||||
| § This is the estimated average effective level of the guarantee, taking account of the increase in the guaranteed price to 29.79p per gallon at the beginning of October 1974, following the 5 per cent. increase in CAP prices then agreed, and the introduction of a special additional payment of 4.18p per gallon at the same time. | |||||
| || Average. The guaranteed price will be related to a standard quantity of 2,950 million gallons. It is intended to assure the Boards an average price of 34.0 pence per gallon for production during the period 1st April—15th September 1975 and 35.5 pence per gallon on the remainder of the standard quantity or on the residue of production whichever is the less. |
§ MAIN ECONOMIC DATA
§ 1. Income, output and productivity
§ The figures in the following table update the series shown in Table 18 of the 1974 Annual Review White Paper and incorporate revisions to the figures in the earlier years:
| ALL COMMERCIALLY SIGNIFICANT HOLDINGS | ||||||
| Net Income at current prices | Net Product at constant prices | June-May years Labour Productivity | ||||
| Year | Actual | 3-year moving average | Index | Index | ||
| £m. | £m. | 1964–65– 1966–67 =100 | 1968–69– 1971–72 =100 | 1964–65– 1966–67 =100 | 1968–69– 1971–72 =100 | |
| 1970–71 | 610 | 618 | 111 | 102 | 137 | 104 |
| 1971–72 | 684 | 718 | — | 110 | — | 115 |
| 1972–73 | 861 | 943 | — | 111 | — | 117 |
| 1973–74 | 1,283 (1,194)✶ | 1,092 | — | 117 | — | 126 |
| 1974–75 (forecast) | 1,133 (1,159)✶ | — | — | 117 | — | 131 |
| ✶ Adjusted to normal weather conditions. |
§ 2.Gross capital formation
| Year | In plant machinery and vehicles £m. | In buildings and stock £m. | Work-in-progress and stock valuation changes £m. | Total £m. |
| 1970 | 133 | 117 | 116 | 366 |
| 1971 | 152 | 133 | 157 | 442 |
| 1972 | 192 | 159 | 202 | 553 |
| 1973 | 231 | 209 | 389 | 829 |
| 1974 (forecast) | 309 | 266 | 430 | 1,005 |
§ 3. Aggregate cost changes
§ Net cost change relating to all products: +£692.1 million.
§ 4. Public expenditure
§ Public expenditure under the common agricultural policy and on national grants and subsidies in 1975–76 is estimated at £306 million. This figure is subject to Parliamentary approval of the Estimates and does not take account of the Review determinations.
41Earl FERRERSMy Lords, we are grateful to the noble Lord, Lord Beswick, for having repeated that Statement. It is a very full and complicated one, because of course it gives the alterations not only in European farm prices, but also in our own guaranteed price determinations. The Statement started with the Minister saying:
In my view the most important decision of the Council was to make radical changes in the Community regime for beef ".There is a distinct switch of emphasis of support away from permanent intervention, and the Statement says that we will take up that option. Does this mean that intervention and the variable premium will be available in the United Kingdom? Does it mean that we can opt out of one or both of them, or for one or other, or will both be operative? Also, how many countries in the Community are opting for the variable premium on beef, or is it just ourselves?We shall need to study these proposals with great care, because what at first sight appears to be acceptable often holds a large number of snags. I would not wish to commit myself or anyone else in commenting upon these without fully studying them, other than to say that at page 8 the Statement says:
With the introduction of the new arrangements for beef, I propose to lay an Order restoring the calf subsidy to the level obtaining before … last March ".Of course that is a major negotiating rub, because what it means is that the calf subsidy will have come down from £18.50 to £8.50 and it is those nicely phrased delicacies put into the Statement which make one think that, possibly, it is not quite as beneficial to the agricultural community and indeed to this country as one thinks at first sight.I wonder whether the noble Lord could enlarge slightly on the monetary changes to which he referred. Does this mean that the "Green Pound" which we discussed the other day has been revalued? If so, has it been devalued? If it has, can the noble Lord say, without going into great; detail, whether it is now on a par with the Irish "Green Pound" or whether there is any difference?
The only other matter I should like to refer to is milk. I am glad to see that the price has been increased by 5p per gallon. I wonder, frankly, whether this will be 42 enough, not only to reimburse farmers for the costs they have had but also to encourage the increase in milk production which is so essential. The increase in the guaranteed price starts on 1st April but the retail price of milk, for some curious reason, starts a month earlier on 2nd March. I wonder why. Can the noble Lord say whether the increase in price is to be funded entirely by the increase in retail price? How will the increase of price to the producer affect the milk fund, because either the milk fund has to have an increase in retail price, which it will have, or it has to have an increase in subsidy as well. I hope the noble Lord will be able to give the assurance that it is not the intention of Her Majesty's Government to increase further the subsidy on milk. Would the noble Lord say whether the details of the Statement have the agreement of the National Farmers' Union? If he could answer those questions I should be grateful.
§ The Earl of KIMBERLEYMy Lords, I, too, wish to thank the noble Lord, Lord Beswick, for repeating the Statement. I agree very largely with what the noble Earl, Lord Ferrers, has asked, and I have one or two other points. I have been given to understand that the cost of transporting New Zealand lamb this coming year is nearly to double, which means that even the 6p per pound which the fanner is to get for lamb is, perhaps, not a sufficient incentive to increase production of lamb in this country. With regard to milk and the extra money per gallon from the end of September, could we please have some assurance that it may be reviewed again nearer that time, as no doubt wages will rise again and so will fuel for tractors and other farming commodities.
The calf subsidy is very frightening because it is a retrograde step. I know that one permanently seems to harass the Minister about the poor farmers' plight, but surely the subsidy need not go down, as the noble Earl, Lord Ferrers, said, from £18 to £8 a calf. I believe that the total increases in the Statement come to about £306 million, and I also believe that in the last 12 months farming costs have risen by £740 million; so the Statement is adequate to recoup some of the losses, but it does not allow for expansion or increase in production in the agricultural industry.
§ Lord WIGGMy Lords, may I underline one or two questions which have been asked. I wonder whether my noble friend would be kind enough to reduce this Statement into terms which people like myself can understand. Would he tell us how much is to be taken from the pockets of the consumer, the housewife? How much is to be contributed by subsidy from the British Government? How much is the British Government to pay to the EEC? How much is the EEC to put into it? If we get answers to those questions, we shall know what it is all about. In the meantime, may I express my congratulations and my sympathy to the noble Lord for having to get up and repeat this smokescreen to cover the fact that the Foreign Office, in attempting to keep us in the Common Market, is getting the Ministry of Agriculture to put out a Statement which nobody can understand until they can read it.
§ Lord BESWICKMy Lords, I should first thank the two noble Lords for the rather cautious welcome which they have given to this Statement. The first question related to whether one could choose as between intervention and the variable premium. The fact is that the option is a combination of both intervention and the variable premium; that is the option we have decided to take. It is open to all the other members of the Community. I cannot say which others will follow our example in opting for this blend of the two schemes. The noble Earl, quite rightly and understandably, seized upon the reference to the calf subsidy. It will mean that the special arrangements which were made for the calf subsidy before this new scheme came into operation will be withdrawn, and there will be, in effect, a reduction. He is quite right about that.
So far as the "Green Pound" is concerned the net effect of the changes to which I have referred will be to close the gap as between the market exchange rate and the exchange rate used for CAP purposes. It will go some way to meet criticism put by the noble Earl's friends last week, although there will still be something of a gap. The noble Earl asked about the situation as between this country and Ireland. Again, there will still be the gap between our exchange 44 rate, the "Green" exchange rate, and the Irish exchange rate. The real difficulty here, I think, stems from the relationship between the Northern Ireland producer and the Irish Republic market. My right honourable friend has under-taken to go into this matter to see what can be done to help, in particular to see what can be done to increase the facilities for processing and slaughtering of cattle in Northern Ireland, thus making it less advantageous to go through the Republic into this country.
The noble Earl, Lord Kimberley, said that he was virtually in agreement with what had been said by the noble Earl, Lord Ferrers. I think that in answering those questions I have answered all the questions the noble Earl had in mind. I was asked about agreement with the NFU. I cannot say that they have agreed; there is no question of them agreeing now, but I have no knowledge of them disagreeing either. My noble friend Lord Wigg asked how much would come from the pocket of the consumer in this country. I cannot give it to him now in terms of absolute figures—that will, of course, depend upon the market price of these commodities through the year—but the estimated increase in the cost of living, as a result of these changes in the increase in the food element in the retail price index, will be something under 2 per cent. The additional cost of the milk increase will mean another 1¾ per cent. increase in the food price element in the cost of living index.
The noble Lord wanted to know how much came from this country and how much came from the Common Market. The fact is, of course, that nothing comes from the Common Market as such. The FEOGA kitty is contributed by individual member-States. I understand that the total contributed by this country to the FEOGA kitty in 1974 was of the order of £160 million, while we actually got back in the shape of these subsidies around £112 million.
§ Lord WIGGMy Lords, can I take it, then, that as a result of this magnificent Statement this afternoon this country is £50 million in the red, and that there is to be added to the cost of living 2 per cent. plus 1¼ per cent. for milk, thus 3¼ per cent.? Is that the picture? Have I got it right?
§ Lord BESWICKMy Lords, it is right that the cost of living is as I have quoted. So far as the FEOGA Fund is concerned, it covers a wider area of commodities than those that I have listed. We pay into that Fund monies which are used for subsidising commodities which we do not in fact use. The net difference so far as this country is concerned is of the order that I have described.
§ Lord WIGGMy Lords, would my noble friend explain what we get out of the Common Market? The people of this country have 3¼ per cent. added to the cost of living, and the Exchequer pays a net sum of £50 million. Can I have explained, as a simple person, what we are supposed to get out of this, except the Statement which has gone on for several minutes? That is all we have got in return.
§ Lord BESWICKMy Lords, I should be quite happy to discuss that with my noble friend, but not on this occasion.
Earl FERRERSMy Lords, may I ask the noble Lord to answer a question which I think understandably he forgot. What is the effect on the milk fund of the increase in the price of milk? Is this to be found solely by the increase in the retail price, or by an increase in the milk subsidy?
§ Lord BESWICKMy Lords, it will be funded entirely by an increase to the consumer.
§ Earl COWLEYMy Lords, can the noble Lord say whether any decisions were taken at the recent meeting of the Council of Ministers in respect of the unilateral ban on beef imports, and its effect upon the non-preferential trade agreements between the EEC, Argentina, Uruguay, and Brazil?
§ Lord BESWICKMy Lords, I understand that the ban was extended indefinitely by the agreement of October last year, although there is a global exception to that ban of something of the order of 38,000 tons overall, of which the United Kingdom can receive 13,500 tons. We have made it clear that so far as we are concerned we should like to get this ban lifted.
§ The Earl of ONSLOWMy Lords, could the noble Lord tell us whether the variable subsidy on beef will be on a live hundredweight basis or a headage basis? If it is on a live hundredweight basis, this will considerably help the dairy producer with fattening and selling off fat Friesian cattle. Is the noble Lord aware —I am sure that he is—that prices of inputs into corn growing have gone up very high in the last year or so? Furthermore, we as farmers—and I must obviously declare an interest—have had a very bad autumn sowing season because of the rains. These prices for wheat, barley and oats look really rather disappointing.
§ Lord BESWICKMy Lords, the target price for beef will be between £22 and £23 per live hundredweight on the hundredweight basis. I accept what the noble Lord says about the increased cost of feedingstuffs, but there are others among his friends who would like to see the price of cereals going up even more. I did not answer one question from the noble Earl, Lord Kimberley, about the situation in September so far as the milk price is concerned. I indicated that there would be this further increase in September.
§ Lord DAVIES of LEEKMy Lords, may I ask on what base? Let us assume that the base now is 100; will the 6 per cent. next September be on the 104 or on 100?
§ Lord BESWICKMy Lords, I confess that I do not follow that question. What I said was that the price of milk will go up by 6 per cent. in March and 47 per cent. in September. Those are the figures that I gave.
§ Lord DAVIES of LEEKMy Lords, the price of milk now is 100 and it is going up 4 per cent. in March; is it going up later 6 per cent. on the 104 or on the 100 that it is now? This is an important financial point.
§ Lord BESWICKMy Lords, it is a point that I shall have to check. I think that the noble Lord got it the wrong way round. It will be 47 per cent. on the 106.
§ Lord DAVIES of LEEKMy Lords, that is not really 4 per cent.